Merrill Lynch Hires Margaret Ren as China Chairman

Merrill Lynch Hires Margaret Ren as China Chairman

By Cathy Chan and Patricia Cheng

Feb. 5 (Bloomberg) — Merrill Lynch & Co. hired Margaret Ren as a chairman of China investment banking after U.S. regulators cleared the former Citigroup Inc. executive of wrongdoing in a 2003 initial public offering.

The 48-year-old daughter-in-law of former Chinese Premier Zhao Ziyang will report to China region Chairman Liu Erh-fei and Asia banking head Sheldon Trainor, said Damian Chunilal, who leads Merrill’s Asia Pacific investment banking operations.

Ren may help Merrill challenge UBS AG and Goldman Sachs Group Inc., who together accounted for a quarter of the value of stock sold overseas by Chinese companies last year. Merrill slipped to sixth place last year from fourth in 2005 in arranging such sales, according to data compiled by Bloomberg. It ranked fourth in IPOs, up from sixth in 2005.

“She’s well-connected,” said Stephen De Pretre, a vice president at headhunter Salzer Consulting in Hong Kong. “For companies that need to do deals in an environment that’s very strongly regulated, having people with strong networks at senior levels is crucial.”

Ren confirmed the appointment, which is effective this week, when reached by phone. She declined to comment further. The mother of two has a master’s degree in management from the Massachusetts Institute of Technology in Cambridge, Massachusetts.

Ren, who joined Citigroup in 2001 after nine years at Bear, Stearns & Co., was suspended in 2004 after the U.S. Securities and Exchange Commission started probing the firm’s handling of China Life Insurance Co.’s $3.5 billion initial share sale, the world’s biggest in 2003. She was cleared of wrongdoing last year.

Bulking Up

Hong Kong’s Securities and Futures Commission on Feb. 2 granted Ren licenses to perform investment banking services. The license approvals on SFC’s Web site list Merrill Lynch as her employer.

“This important hire reflects our commitment to this business,” said Chunilal in an internal memo sent today.

Investment banks and buyout firms are bulking up as companies in China, the world’s fastest-growing major economy, prepare to sell more stock and buy local and overseas competitors. The value of China’s domestic stock markets has more than tripled in the past year, topping $1 trillion.

Chinese initial public offerings soared after the government ended a ban on share sales in May. The $75.4 billion of stock sold in China and Hong Kong trailed only that of the U.S. in 2006.

Blackstone Group LP, manager of the world’s biggest buyout fund, last month hired Antony Leung, Hong Kong’s former financial secretary, to run its business in China, Hong Kong and Taiwan. Oaktree Capital Management LLC, a Los Angeles buyout firm with more than $33 billion of assets, hired former JPMorgan Chase & Co. Asia Pacific Chairman Ralph Parks same month.

Citigroup’s Woes

Wilson Feng, a vice chairman of China investment banking, was promoted to a chairman, according to the memo.

Citigroup’s fortunes in China waned after it ousted Ren. Her successor as head of China investment banking lasted 15 months. After Ren left in June 2004, 10 of Citigroup’s 13-person investment banking group dedicated to China quit the New York- based company.

The company, whose roots in China go back to 1902, slumped to 11th in overseas stock sales by Chinese companies last year from fourth in 2003, Bloomberg data shows. The only Chinese IPO Citigroup handled last year was China Coal Energy Co.’s $1.9 billion sale in December.

Citigroup is fighting back. Last month, it hired Zhang Wendong, former co-head of China investment banking at UBS AG, to be managing director for China investment banking. In March, it tapped Zhao Jing, former co-head of China investment banking at Morgan Stanley.

`Stronger Than Ever’

“2006 was a year of investment for us and we ended up with a great deal of momentum as the year ended,” Bob Morse, the New York-based firm’s chief executive officer of corporate and investment banking in Asia, said in a Jan. 26 interview. “We have a pipeline that is stronger than it has ever been.”

Chinese companies may raise as much as $55 billion in IPOs this year, with domestic share sales overtaking Hong Kong offerings in value, according to JPMorgan Chase & Co.

Shares of Industrial Bank Co. soared 39 percent in their Shanghai debut today after the $2 billion initial public offer attracted record bids. Investors ordered $150 billion worth of stock — equal to the market value of International Business Corp.

This year, bankers will be courting companies such as Agricultural Bank of China, which last week said it will seek a government bailout to prepare it for an IPO. The bank had 18 percent of outlets in the nation as of last month, and it employs 452,000 people.